WAY TO GO, MCDONALD'S

McDonald's Corp. hasn't spent a nickel to advertise its pending 55-cent sandwich discounts, but most Americans already know a big sale is in the offing.

In fact, five out of 10 fast-food consumers who say they haven't had a Big Mac recently are ready to slap down 55 cents to get one, according to a nationwide survey for CRAIN'S CHICAGO BUSINESS. What's more, 83% of those who regularly munch McDonald's sandwiches say they will patronize McDonald's more often just for the cheaper eats.

Good thing, because the taste of McDonald's food is not pulling people to the Golden Arches.

A full 41% of survey respondents say Burger King offers the tastiest burger for their buck, while 23% rank Wendy's as tops in food quality and 18% choose McDonald's, according to a random telephone survey of 300 people conducted by Chicago market research firm Leo J. Shapiro & Associates Inc.

But McDonald's scored highest marks when consumers were asked to choose which chain has the best prices (41%) and fastest service (39%).

"Their service is excellent," raves Mary Louise Hurley, a 78-year-old gardener from Whiting, N.J., who regularly stops at McDonald's for "elegant coffee" and an occasional fish sandwich. "They can have long lines, and you still get waited on quick."

Comments like those should be music to the ears of the Oak Brook-based chain's executives, who declined to comment on the survey.

But according to some analysts, the survey results also strike chords of redundancy-and underscore the risks behind the discounting program.

Once the sales are over, patrons may feel cheated, contends Damon Brundage, restaurant analyst at NatWest Securities Corp. in New York.

"Customers think you're still making money (during a sale)," he explains.

The 55-cent price break is part of a yearlong breakfast and

lunch promotion McDonald's is launching next month. Bolstered with a $66-million ad budget, the campaign is aimed at reversing six quarters of flat-to-declining same-store sales at nearly 12,000 McDonald's restaurants in the U.S.

Thanks to media coverage surrounding McDonald's recent meeting with franchisees, almost 60% of those polled already knew that McDonald's is putting its sandwiches on sale-although the company has yet to announce the promotion to the public.

Analysts divided

When asked to rate their chances of visiting a McDonald's in the next four weeks, 47% said "probably" or "definitely." But when informed of the 55-cent Big Mac sale, the number jumped to 65%.

"I will buy whatever's on sale," says 37-year-old Kay Dyges of Sunrise, Fla., a three-times-a-day McDonald's customer whose voice is recognized at her local drive-through. "I always go with whatever they are promoting."

Not everyone is as price-driven.

"Discounts are nice," acknowledges Patricia Hurley, a 50-year-old retiree from Kallispell, Mont. "But the honest truth is, if I'm going to eat somewhere, I'm going to go there, no matter what the price."

Analysts are divided over the potential of the sale campaign in reversing a decline in McDonald's domestic profits, which fell 9.5% to $1.14 billion last year.

If, as the survey suggests, more customers can be lured by the sandwich deal-which will be available only with the purchase of higher-margin fries and drinks-the increased volume will drive up sales.

But already-tight margins for McDonald's franchisees will be squeezed further if the added traffic isn't enough to offset the price cuts.

Senior McDonald's officers told analysts last week that once people get through the door, they will be impressed with the familiar but improved McDonald's-better service, cleaner restaurants-and will return after the sale is over.

Not everyone will, according to the survey. Indeed, 41% say they won't visit McDonald's when discounts are not offered.

"A lot of people are just interested in the next best deal," observes Everen's Mr. Haskell.

And they may be surprised at the terms of McDonald's latest sale.

Housewife Ann Chapman of simplicity, without duplicity.

"This has the potential to blow up," warns Mr. Brundage, "because it runs the risk of having a lot of consumers angry for being misled."

For now, 70% of consumers say they "feel better about McDonald's" because of the upcoming sales. (Some analysts feel the same: "They're trying," says Patrick Schumann, an analyst at Edward D. Jones & Co. in St. Louis.)

Wanted: 'a good burger'

In the morning, McDonald's is the fast-food breakfast choice of 18% of survey respondents, vs. 11% for Burger King and 7% for Wendy's.

At lunchtime, however, Burger King prevails with 25%, vs. 20% for McDonald's and 16% for Wendy's.

By including breakfasts in the discount campaigns, McDonald's executives believe they can undo some of the time period's marketshare erosion to Miami-based Burger King Corp.-and have the more profitable breakfast items balance out any margin losses that franchisees may see on Big Macs or McRib sandwiches.

Customers, of course, care more about taste than margins. On that count, McDonald's needs help.

"I wish McDonald's would come out with a good burger," says Ms. Chapman, a fan of the chain's fries. "Something comparable with the Whopper."